UK inquiry finds banks shut 142,000 small business accounts in a year

AN ONGOING inquiry by Britain’s cross-party Treasury Committee mentioned that eight of the nation’s prime banks shut virtually 142,000 accounts held by small companies within the final 12 months, amid considerations some firms are struggling to entry financing.

Figures provided by Barclays, HSBC, TSB, Lloyds, Santander, NatWest, Metro and Handelsbanken confirmed 2.7 per cent of the 5.3 million enterprise accounts held by small firms have been closed for causes together with danger urge for food and monetary crime considerations.

“We can see from these figures that thousands of small businesses fall foul of their bank’s risk appetite definition, leaving them without access to a bank account,” mentioned Harriett Baldwin, chair of the Treasury Committee.

Only three of the banks listed “risk appetite” as a cause for closing accounts, with 4,214 circumstances listed.

Baldwin mentioned this raised questions over whether or not discussions on ‘de-banking’, the business time period used to explain a buyer having an account closed or refused, could also be taking place “informally” and never “systematically recorded”.

“One of the most startling pieces of evidence emerging from our inquiry … is the readiness of lenders to close business bank accounts with little or no notice,” she mentioned, including: “Any company engaged in a legal business activity in the UK should be able to find a bank to offer them a bank account.”

Britain’s Economic Secretary to the Treasury, Bim Afolami, is about to face questions from the Treasury Committee on Wednesday (Feb 28) on whether or not banks are treating small enterprise prospects pretty and if laws might supply higher safety. REUTERS